Tech News & Commentary

Apple iPhone 5S shows 'staying power' in buyer survey

Demand for Apple's (AAPL) flagship iPhone 5S smartphone remains strong six months after its launch and a month before the debut of rival Samsung's Galaxy S5 handset.

A survey of U.S. smartphone shoppers last week by Piper Jaffray showed that the iPhone 5S has "staying power," Piper Jaffray analyst Gene Munster said in a research report Monday. Among consumers planning to buy a new smartphone in the next three months, 33% expect to purchase an iPhone 5S, compared with 35% in December and 38% in September, immediately after the phone's launch, Munster said.

"We believe the positive news from our survey is that the iPhone 5S seems to be holding its ground well even though we are approaching six months in age (half life in terms of timeline to the next launch)," Munster wrote. "We believe this is an indication that Apple's position as top player in the high-end smartphone market remains secure; however, the downside is that the U.S. smartphone market is rather mature."

Apple's midrange iPhone 5C, however, is fading from its already low position in consumers' minds, he said. Just 6% of smartphone buyers intend to get the colored plastic handset in the next three months. That's down from 9% in December and 12% in September.

Munster gave two reasons for the slack iPhone 5C demand.

"First, we believe there is a significant value increase in purchasing the 5S (Touch ID, A7 chip) vs. the 5C and consumers recognize this," he said. "Second, we believe that the concept around colors as a unique selling point has not worked as well as it had with iPods because a significant number of smartphone users cover their smartphones with cases, which was typically not the trend for iPod owners."

Piper Jaffray's survey of 1,003 U.S. consumers also showed a growing demand for Google (GOOG) Android-based smartphones. Among consumers planning to buy a smartphone in the next three months, 46% intend to get an Android handset. That compares with 39% for the iPhone, including the 5S and 5C. Android phone purchase intent was 43% in December and 32% in September.

Munster rates Apple stock overweight, with a price target of 640. Apple shares were up a fraction, near 527, in morning trading on the stock market today.

Also Monday, Canaccord Genuity analyst Michael Walkley raised his price target on Apple stock to 600 from 570 and reiterated his buy rating.

Apple is likely to gain smartphone market share in the second half of 2014, when it is expected to release a bigger screen iPhone 6, Walkley said. The high-end Android LTE smartphones introduced last week at the Mobile World Congress in Barcelona showed a "lack of innovation," he said.

"Given the lack of differentiated Android smartphones, we believe Apple could gain market share of the high-end smartphone and tablet markets during 2H/2014 based on our belief new iPhones and iPads with larger screen sizes could create a strong upgrade cycle among Apple's loyal base," Walkley wrote.

Samsung's Galaxy S5, introduced last week, appears to be a "solid product," but is "more incremental to the Galaxy S4 than a compelling upgrade," he said. It is due out April 11.

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